Arena Blog

The Rise of the Modern Product Development CFO

The
biggest reason why product development company CFOs have neither noticed nor
embraced product lifecycle management (PLM) may be because their roles have historically
been limited to accounting practices, such as ensuring company
compliance with financial reporting and control requirements — rather than any
direct involvement in specific IT strategic initiatives.

Of course, CFOs
naturally see clear ROI when it comes to financial systems, such as enterprise resource planning (ERP), but PLM
– at its core – is a bill of materials (BOM) and intellectual property
management system with huge value not normally measured in a balance sheet.
Simply put: CFOs see how inventory translates to dollars in an ERP system but don’t
always have complete clarity as to how product quality and time to market
translates to tremendous cost savings and earnings.

Historically speaking,
identifying financial benefits in a PLM system is not as obvious as in an ERP
system.

But that may all soon be in the past. A new manufacturing
economy requires new champions with a broader, more holistic view of the
enterprise.

The treacherous waters of a competitive global economy require savvy
fleet commandeers who can heroically navigate their business away from
dangerous rocky shoals and into profitable new ports; because of this, the role
of CFOs at innovative product companies has quickly evolved from “bean counter”
to powerful agent of change and business leader.

The aforementioned Deloitte report included a survey in which CFOs
claimed to have strategic input in which industries their companies should
enter/exit (78%), and what businesses to grow/shrink (73%). The report also
discovered that CFOs are most likely to spearhead decision-making
processes, including where to focus cost-reduction efforts (57%), which performance
measures to track (58%), which businesses to acquire/divest (41%) and how to
create value (40%).

So what do all of these statistics,
some of which have increased by upwards of 50% over the last few years, add up
to?

For one thing, these findings indicate (whether
fiefdom-conscious CIOs like it or not) there’s an increasing trend for CFOs, especially at small to midsize
manufacturers, to vet – daresay – drive
technology investments.

Arena,
the pioneer in cloud PLM software, has witnessed firsthand the positive impact
strategic-oriented executives like CFOs can have on the technology decisions
innovative product companies make to maximize business results. In fact, we even created a whitepaper containing ROI numbers, that will pique your CFO's interest, that were obtained directly from Arena customers
(Philips, Ruckus, Pixel Velocity, respectively).

To learn more about the evolving role of CFOs in modern product development companies, download the whitepaper Why Executives Are Banking on Cloud PLM to Save Money. Arena offers its own proprietary PLM analytics coupled with aggregated ROI metrics derived from case studies conducted by third parties, including Aberdeen, Accenture, AMR, CIMdata, Gartner, IBM, and Oracle, to provide a guideline for determining a potential range of measurable financial benefits PLM can offer your company. These findings highlight industry-specific efficiency improvements categorized into these three groups: Manufacturing and Internal Operations, Supply Chain Optimization, and Customer Satisfaction.